Hedge first: buy legs fill before sell legs

Why order of legs matters

Margin is computed on the portfolio as it stands when each order arrives, not on the strategy you intend to end up with.

A short call with a long call above it is a defined-risk spread; the same short call alone is unlimited risk. If the follower's SELL reaches the broker a second before its BUY hedge has filled, the broker sees a naked short. Depending on funds, that is either a large margin block or a "margin shortfall" rejection — and a rejected leg leaves the follower out of sync with the leader. SPAN margin, explained covers why the wing makes such a difference.

What Trade Copy does

Two things work together on every real follower:

• Buys are queued before sells. When one read of the leader's book finds several new fills, cancels go first, then modifies, then BUY copies, then SELL copies. Sizing is fixed before the reorder, so it changes nothing about quantities.
• A copy waits for opposite-side copies to finish. Before a follower's copy goes out, it waits until that follower's in-flight copies on the other side are done — filled, rejected or cancelled — checking the follower's order book about once a second.

The wait is at most 10 seconds. If the earlier copy has still not filled, the next order goes out anyway with a warning in the Activity Log that the broker may ask for extra margin. Holding it back indefinitely would leave the follower half in a position the leader is fully in, which is a worse outcome.

Demo followers skip the wait, since demo orders fill at once. Resting copies of the leader's pending orders are meant to rest, so they are never waited on.

Exits run the same logic in reverse

Selling the hedge first on the way out would leave the short naked for a moment, which is the same margin problem in the other direction.

Check Positions follows the same rule when it fixes drift: its buys are sent first and its sells only once that follower's buys have filled. If the buys do not confirm, the sells are held back with a message, rather than going out short and unhedged.

A worked example

Hypothetical. The leader enters a NIFTY bear call spread in one go: SELL 2 lots of the 25,300 CE and BUY 2 lots of the 25,500 CE, and both appear in the same read. A ×3 follower's BUY 6 lots of 25,500 CE is sent first. Its fill shows in the follower's book 1.5 seconds later, and only then does the SELL 6 lots of 25,300 CE go out.

Now suppose the hedge is slow — it rests because the premium jumped. At 10 seconds the SELL goes out anyway, and the Activity Log records that the BUY had not filled, so you know to check that account's margin.

Limits and what to watch

• It cannot fix the leader's own order. If you leg into the short first on the leader and add the hedge a minute later, the follower copies in that order too.
• It adds a little latency to the second leg. A sell waits for the buy's fill, typically a second or two. That is the price of not being margined as naked.
• Unfilled hedges still need attention. The 10-second warning means the follower may be carrying a naked short; re-pricing of resting copies is covered in order controls.

Where to find it

1. Nothing to switch on: it applies to every real follower in every group.
2. Watch for the "sent although its earlier copy is not filled" warning in the Activity Log.
3. Use Check Positions if a leg was rejected.

Common questions

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